FBI Busts Senior NYC Housing Official On Corruption Charges

FBI agents this morning arrested a ranking New York City government official on a variety of corruption charges after he allegedly accepted $600,000 in bribes.

Wendell Walters, a senior official in New York City’s Department of Housing Preservation and Development, faces conspiracy, bribery, and racketeering charges for allegedly pocketing the cash from real estate developers and builders seeking lucrative city contracts, officials said.

Prosecutors from the US Attorney’s Office anti-corruption squad in Brooklyn say that Walters, who serves as the department’s assistant commissioner for new construction, took the bribes in exchange for handing out contracts amounting to millions of taxpayer dollars to renovate or build affordable housing units in New York City.

One example of Walters’ dealings involves an unnamed businessman, and the two met on various occasions – including on one occasion at a golf driving range in The Bronx, prosecutors say.

Walters often demanded his bribes by writing the amount on a piece of paper.

Later, the unnamed businessman delivered the cash to Walters — often in installments of $25,000 — and hid the money in golf ball boxes, overnight mail envelopes and coffee cups, prosecutors said.

Thereafter, the unnamed businessman was awarded more than $10 million in contracts to work on city projects in Brooklyn, Queens and The Bronx, prosecutors said.

Six other people were also arrested today by FBI agents for their alleged involvement in the bribery scheme, officials said.

These six were described as real estate developers Stevenson Dunn, Lee Hymowitz, Michael Freeman, Sergio Benitez, Robert Morales and Angel Villalona, officials said.

All are scheduled to be arraigned later today in Brooklyn federal court.

The agency underwrites the renovation and repair of existing housing units, as well as financing new construction.

Over the past quarter century, the department has spent more than $8.7 billion to provide for more affordable housing for city residents, according to its website.

“New Yorkers relied on these defendants for the safe haven of affordable housing. Instead, the defendants allegedly put their own greed over the needs of low-, moderate- and middle-income New Yorkers,” said Loretta Lynch, the US Attorney for the Eastern District of New York.

Asked about the allegations, Mayor Bloomberg said, “We have 330,000 employees in the city and I’d love to tell you they’re all honest, perfect, whatever. I can tell you the vast majority are. I’ve had experience in both the public and private sector and I can tell you this is as good a workforce as I’ve ever seen.

“Our Department of Investigation uncovered this case. The investigation into this guy Wendell Walters, who began work at HPD back in 1998, is continuing. HPD cooperated with the investigation. They suspended Walters without pay, disqualified the indicted developers from city work. We just have no tolerance for corruption with anybody in city government.”

In a statement released this morning, the agency said, “We are cooperating fully with the City Department of Investigation and other involved law enforcement and will continue to assist them in their inquiries.”

“There is no room for corruption or bribe seeking in government and these circumstances pain me deeply on a number of levels” the agency added in a statement. “We are here to serve the people, not to take advantage of our positions for personal profit.”

In recent years, federal prosecutors say, Wendell B. Walters has spent a fair amount of time scribbling down numbers on little pieces of paper.

He did it in a coffee shop in Manhattan in 2002, when he wrote “250.” He did it at a golf driving range in 2007; then, the number was “70.” And he did it three other times, according to court papers unsealed Thursday in his federal bribery and racketeering conspiracy case.

In each instance, the papers say, Mr. Walters, who was an assistant commissioner at the city’s Department of Housing Preservation and Development, was demanding a bribe.

Each number stood for how many thousands of dollars he wanted. When all was said and done, according to a search warrant affidavit, the numbers added up to something in the neighborhood of $600,000.

Mr. Walters, 49, was suspended from his job after his arrest on Thursday and, with the six developers charged along with him in federal court in Brooklyn, faces up to 20 years in prison if convicted. His lawyer, Howard R. Leader, did not return a call seeking comment. All seven have pleaded not guilty.

As a result of the case, which has raised some questions about the oversight of Mayor Michael R. Bloomberg’s $8.5 billion affordable housing program, the housing agency is reviewing how it awards projects to developers and contractors and how they are vetted. The agency is the largest municipal developer of affordable housing in the United States.

“We are taking this very seriously and are examining the processes involved in this program,” said an agency spokesman, Eric Bederman.

The rules the agency uses to award development projects and construction contracts appear looser than those used by other city agencies.

The rules say companies may be invited to bid through a process called requests for proposals; the agency can choose from a list of approved companies; and it can select “a sponsor for a project by any method which H.P.D. determines will best further the purpose of the program.” That includes, “in the discretion of H.P.D., by a direct designation of an entity judged by H.P.D. to be suitable for the task” — essentially, whomever the agency wants.

Mr. Bederman said that in the Neighborhood Entrepreneurs Program, which was the focus of the indictment, all projects had been awarded through requests for proposals.

Mr. Walters’s role in the process was still unclear on Friday. The indictment and a search warrant affidavit for Mr. Walters’s home in Harlem and his office at the agency’s headquarters in Lower Manhattan allege that he accepted approximately $600,000 in bribes from contractors and developers in exchange for steering to them $22 million worth of agency projects in Brooklyn, the Bronx and Queens. The affidavit even suggests that the Harlem home, on historic Strivers’ Row, was itself a form of bribe from a developer he had helped and who has since died.

The Mason Tenders District Council of Greater New York and Long Island, which represents demolition and some construction workers, said Friday that it had little doubt that the agency was at fault. “The problem is how H.P.D. conducts its business and awards contracts,” said its spokesman, Richard Weiss, in an e-mail. Some unions have been upset with the agency for awarding jobs to contractors that use nonunionized labor.

Officials have said that the investigation, involving several agencies, including the F.B.I., the city’s Department of Investigation, the Internal Revenue Service, federal prosecutors in Brooklyn and the federal Labor Department, is continuing, and they will be combing through evidence they seized in the searches of Mr. Walters’s home and office.

According to the court papers, Mr. Walters did not always receive what he asked for. Stevenson Dunn, a developer who was among those charged, told a cooperating witness that Mr. Walters had asked him for $75,000 “as a bribe to help secure additional work with H.P.D.,” according to the search warrant affidavit. But Mr. Dunn, a high school friend of Mr. Walters, paid only $25,000 and pronounced Mr. Walters “greedy.”